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Toss and turn between Russia and EU may come at price for Ukraine

November 14, 2013, 16:04 UTC+3 Alexandrova Lyudmila

MOSCOW, November 14 (Itar-Tass) - Negotiations over the EU Association Agreement, scheduled to be signed in late November, have come to a standstill after the Ukrainian Parliament failed to fulfill Brussels’ requirement to permit ex-prime minister, opposition leader Yulia Timoshenko, now in jail, to undergo medical treatment abroad. Some suspect that Ukraine fears economic difficulties ensuing from the EU integration and that it has received some enticing offers from Russia, while others speculate that Viktor Yanukovich is reluctant to release Timoshenko for fear he may take her place in jail.

Meanwhile, Ukrainian entrepreneurs are warning the authorities again fast-tracked accession to the EU. Prime Minister Nikolai Azarov says better relations with Russia is the Ukrainian economy’s chief goal, while the opposition threatens to urge people to take to the streets. Experts warn that while manoeuvering, Yanukovich risks losing the public’s trust.

The Ukrainian Parliament failed to adopt a law that would allow Timoshenko to receive treatment abroad on Wednesday, thus missing the deadline set by the EU. However, the EU suddenly gave Ukraine almost a week more. Opposition leaders have accused the authorities of trying to thwart the process of European integration.

At a government meeting on Wednesday Azarov practically told his ministers Ukraine was turning around away from the EU towards Russia. “Ukraine cannot abandon its cooperation with Russia, as it has no sources to compensate for the ensuing losses,” he said. A loss of its market share in the Customs Union (Russia, Belarus and Kazakhstan) that would follow the EU integration would mean a hard blow on the Ukrainian economy, he added.

The Ukrainian opposition believes it is meetings with Russian President Vladimir Putin that influenced the position of Yanukovich and, accordingly, the parliamentary majority that upset the voting. Indeed, the press notes, the situation started to change in late October, after the latest meetings between Yanukovich and Putin. Previously, the Ukrainian authorities said membership of the Customs Union would perpetuate economic problems, while a rapprochement with the EU would give Ukraine a chance for a fundamental modernization of the economy. But the rhetoric has changed in recent days.

Yanukovich’s meeting with industrialists, entrepreneurs and trade unions must also have impacted on his stance. Former Ukraine’s prime minister, President of the Ukrainian Union of Industrialists and Entrepreneurs of Ukraine Anatoly Kinakh told the president major industrial facilities had been frozen and pointed to a substantial decline in production. Entrepreneurs requested the president to postpone the association agreement for a year.

Even according to the most cautious economists’ estimates, in the first years after the agreement is signed Ukraine may suffer losses of 3-5 billion euros. The sectors that may be affected the most are aircraft-building, mechanical engineering, coal production, metallurgy, chemistry etc. Restrictions on Ukrainian exports to Russia and a decline in budget revenues from customs duties on the border with the EU may negatively affect the overall economic environment.

However, many Ukrainian pundits believe the president had not abandoned its course towards integration with the EU but presented the EU with two demands at the last moment - one for removing the Timoshenko issue from the EU agenda and, as an exception, providing Ukraine with technical aid at the first stage of integration. The association and free trade zone agreement will probably be signed in Vilnius later this month, with all fundamental issues put off until the document is ratified by the EU countries’ parliaments.

Experts warn Ukraine’s inconsistency may cost it dear.

“Yanukovich has just realized the situation. Earlier he must have perceived it in general terms,” First Deputy Director of the CIS Studies Institute Vladimir Zharikhin told Itar-Tass. “He would like to maintain relations with both the Customs Union and the EU but the latter has made demands that would render this impossible. Originally, there was no strict requirement to release Timoshenko.”

Now Yanukovich fears he might sign the agreement that would be implemented by another president, the political scientist believes: “He has realized that letting Timoshenko go to Europe would mean reserving a prison cell for himself.”

Zharikhin estimated the chances the agreement would be signed as fifty-fifty, just like the ratio of advocates and opponents of integration with the EU in Ukraine.

“Either Brussels agrees to association without resolving Timoshenko issue, or it does not, and then Ukraine will turn towards Russia, he believes. However, he doubts whether Russia needs it. “Given Ukraine’s stance on gas issues, it may simply ruin the Customs Union. Do we need that?” he said.

Deputy Director of the Centre for Political Technologies Aleksey Makarkin is quoted by the daily Kommersant as saying he is sure the delay would not benefit Ukraine. “Yanukovich sticks to his course of blackmailing the EU for concessions and simultaneously sending signals to Russia. But he has repeatedly deceived Russia, and Moscow does not trust him any more. Meanwhile, he has practically promised the EU Timoshenko will be released from jail. In effect, he may lose trust of both Russia and the EU.”

“Obviously, Ukraine is trying to bargain with both Russia and the EU trying to combine both integration vectors, or, at the worst, choose the most beneficial option,” says a political scientist at the Centre for Political Technologies, Tatyana Stanovaya.

She forecast that Ukraine might ultimately frustrate the Agreement and trigger another ‘gas war’ with Russia.